U.S. Trade Representative Robert Lighthizer could announce the enforcement action as early as Wednesday, December 9, according to a U.S. industry source familiar with the matter.

U.S. dairy groups, including the National Milk Producers Federation and the U.S. Dairy Export Council, as well as lawmakers from the northern states have expressed concerns about how Canada allocated its tariff rate quotas (TRQs) under the new trade deal, saying the process favoured Canadian dairy suppliers.

A spokesperson for Mary Ng, Canada’s Minister of Small Business, Export Promotion and International Trade, says Canada is following the rules of the agreement.

“Like all aspects of the Canada-U.S. trade relationship, Canada takes its obligations very seriously. Canada’s administration of its dairy TRQs is in full compliance with its commitments under the new NAFTA,” says Youmy Han, in a statement shared with RealAgriculture.

“Our government will always stand up for our dairy farmers and a strong supply management system in Canada, which ensures the viability of our family farms and the vitality of our rural areas,” continues the spokesperson for Minister Ng.

The U.S. could file a request for consultations — the initial step in the dispute settlement process under CUSMA or USMCA, after which the responding country has 15 days to engage regarding any complaints about perishable items, such as milk, and 30 days to respond for other products. If the countries fail to reach a deal through consultations, the complainant can request the creation of a dispute settlement panel to examine the issue.